China's Prime Office-Property Market Recovers as Economy Fuels Investment

China’s premier commercial-property market posted a recovery in investments and rents in the first half as economic expansion spurred demand, according to CB Richard Ellis Group Inc.

Purchases of high-end properties including entire office buildings and shopping malls in 15 major Chinese cities totaled almost 50 billion yuan ($7.4 billion), up fivefold from a year earlier, the world’s biggest commercial property broker said in a report today in Beijing.

A recovery in demand from overseas companies’, local high- tech, energy and manufacturing operations helped raise rents for Beijing’s high-end office buildings by 5.7 percent in the first half, according to the report. China’s economy grew 11.9 percent in the first quarter, the fastest pace since 2007’s second quarter, fuelling a boom in the housing market.

“In the main cities, the market for high-end office buildings bottomed out from the second quarter and showed signs of an evident recovery,” Danny Ma, a senior director for China at CBRE Research, told reporters in Beijing.

A rebound in demand for employees’ accommodation from multinational companies in the Chinese capital also helped push monthly rents for luxury apartments, or those costing more than 30,000 yuan per square meter, by 1.5 percent in the period from the previous three months, the report said.

Luxury Market

Rents in the luxury residential market bottomed out in the second quarter in all of the 15 cities monitored by CBRE except northern China’s Tianjin, as the economy recovered and some buyers delayed purchasing plans due to the government’s crackdown on speculation, Ma said.

Beijing’s high-end apartment prices jumped 10.1 percent to 48,002 yuan per square meter in the second quarter from the previous three months even as sales dropped, after developers slowed supply of new housing, the report said. Property companies may have to offer discounts to woo buyers this year when the government enforces measures to prevent a bubble in the housing market, the report added.

China has since April raised mortgage interest rates and down-payment ratios for second homes, and suspended lending for third homes to avert asset bubbles.

--Zhang Dingmin. Editors: Chitra Somayaji, James Gunsalus

To contact the Bloomberg News staff for this story: Zhang Dingmin in Beijing at Dzhang14@bloomberg.net

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